New York Attorney General Eric Schneiderman recently announced settlements with four out-of-state companies accused of gouging consumers on medical loans. The retail installment obligations (RIOs), with interest rates that approached to 55 percent, targeted borrowers who needed financing for elective medical and surgical procedures. The companies involved include MyMedicalloan.com, operating as Surgeryloan.com; Duvera Billing Services, LLC; Highlands Premier Acceptance Corporation; and Paramount Capital Group, Inc. The firms were not licensed to finance RIOs in New York.
Under the settlement terms, the companies agree to offer the RIOs at the legal rate of no more than 16 percent and will provide about $230,000 in repayments or credits to about 317 New York consumers. They also must cease all conduct as unlicensed sales finance companies in New York and notify consumer reporting agencies to delete all references to the transactions from customers’ credit records. The companies will collectively pay about $35,000 in penalties.
Schneiderman's office launched an investigation after receiving a consumer complaint about Surgeryloan.com. The website operated as a broker of RIOs between medical providers and financiers, providing a Web-based application platform for consumers and providers. The platform requested information about consumers' employment and credit history, automatically set the annual percentage rate and RIO repayment terms, and submitted the completed application to potential financiers. New York’s banking laws require that a company selling RIOs be licensed as a sales finance company or lender.